Excellent intro into the methodology of Austrian Economics.

Excellent intro into the methodology of Austrian Economics.

Excerpt from: http://managainstthestate.blogspot.com/

I will just point out that it is of crucial importance to use the correct methodology in any subject. The laws of chemistry and biology can only be learned using the scientific method, because they are empirical subjects. We make observations, construct hypotheses, make predictions, perform experiments, and take measurements etc, to discover biological or chemical laws.

The laws of mathematics, on the other hand, can only be learned through logical deduction, because mathematics is a non-empirical (a priori) subject. Some ‘empirical mathematician’ who claimed to have found in nature a triangle that violated Pythagoras’ Theorem would be laughed at by mathematicians, and rightly so. Obviously, he would be incorrect (perhaps his measuring instruments are faulty?) because Pythagoras has been mathematically (logically) proven to be true – which is to say, the theorem is true whenever the fundamental axioms of geometry are true. Likewise, someone who claimed Pythagoras Theorem is true because he has drawn and measured 10,000 triangles and they all obey the theorem would also be laughed at. He may be right in his conclusion, but he’s not using the right methodology to reach it and so his work is useless to mathematics. He’s not a proper mathematician; he’s a crank.

Austrians (uniquely) put economics in the same category as mathematics in this sense. Economics is axiomatic-deductive. Take the statement “all other things being equal, the introduction of a minimum wage law will increase unemployment”. Austrians maintain that this true because it has been derived using deduction from a true axiom. A non-Austrian would say this is either a) true because the empirical data shows that minimum wage laws do usually increase unemployment, or b) false because the empirical data shows that minimum wage laws do NOT usually increase unemployment.

While non-Austrians argue endlessly over the empirical data and its interpretation and meaning, Austrians sit back, knowing that the empirical evidence has no bearing on the truth or falsity of the statement.

via Man Against The State.

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